How to improve the rental market in London
According to The Government’s White Paper on Housing ‘Fixing our broken housing market’, the housing market in the UK suffers from a serious under-supply of homes. Since the 1970s, there have been on average 160,000 new homes each year in England. To put an end to the affordable homes crisis, the UK needs 275,000 or more homes per year to keep up with population growth and start to tackle years of under-supply.
Renting, which has increasingly become very popular for Britons either by choice or out of necessity, is one of the aspects of the UK real estate market that needs reform.
So, how can the government fix the problematic housing market and provide solutions to the rent generation?
Security of tenants
First of all, renting needs to be more secure for tenants. Many times, tenants are not familiar with their rights or their responsibilities. As a result, various different tenancy agreements are signed that is not always fair for both parties. Fixed-term contracts, Assured Shorthold Tenancy agreements, and Non-Assured Tenancy agreements, all have different advantages and disadvantages. It’s for the best interest of the tenants to always be informed before signing a tenancy agreement.
Many countries in Europe, impose limits to rent increases. Government regulation of agreed renting prices is not a new concept and it can prove beneficial. For example, in Ireland and France, it is stated by law that rent increases are to be implemented in coordination with market levels. In Latvia, a rent increase can only happen prior to a tenant-landlord agreement. In England, the rent can normally only be increased once a year, depending on the tenancy agreement but the law says such increases must be “fair and realistic”.
Taxes and stamp duty
As regards to landlords, it has been harder for them to make money over the last couple of years. Luckily the axe of stamp duty and the gradual withdrawal of tax relief on mortgage payments, have provided more incentives for landlords. However, stamp duty on second homes is still in place, making matters worse for a landlord with a growing portfolio.
The Residential Landlords Association has recently called for exemptions from the stamp duty surcharge’ where landlords add to the supply of new homes, cutting the red tape when it comes to evictions after a serious bridge of contract, a Housing Court to resolve disputes and more flexibility on behalf of mortgage lenders.
Last but not least, the Build to Rent scheme was launched in 2012 as part of a series of government initiatives to increase the supply of high-quality homes available for market rent in the private sector.
While landlords are traditionally individuals who are buy-to-let investors, there has been a significant increase of “bigger” landlords such as insurance companies. Built-to-rent leases offer stability and peace of mind for periods of time that range up to 70 years. Rental agreements are over and contracts are very clear for both sides. Sometimes, additional services are provided, such as repairs and enhancing amenities, that make build-to-rent homes even more desirable to tenants.
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